Danaos Corporation (NYSE: DAC) reported strong earnings for the fourth quarter of 2025, supported by a growing revenue backlog, high fleet utilization, and a strategic move into LNG, indicating a shift away from its traditional focus on containerships.
The Athens-based company posted an adjusted net income of $131.2 million, or $7.14 per diluted share, for the quarter ending December 31, 2025. This result is similar to last year's performance, even with lower charter rates. Management highlighted long-term charter agreements, financial strength, and greater options as the main points for the quarter.
CEO Dr. John Coustas noted that global trade is quickly adapting to geopolitical changes, with container volumes reaching record highs, despite major shipping lines still avoiding the Suez Canal.
“Since the Suez Canal is largely bypassed and trade patterns are becoming more diverse, demand for midsize vessels remains very strong,” Coustas said, pointing to steady export activity from China and the resilience of global container flows.
Danaos is continuing to expand its fleet in response to tight demand. Since its last earnings report, the company has ordered four 5,300-TEU containerships, which are set to be delivered in 2028 and 2029.
Currently, Danaos has a total of 27 containerships on order, with a combined capacity of 174,550 TEU, scheduled for delivery between 2026 and 2029. All new ships will comply with IMO Tier III emissions standards and EEDI Phase III requirements.
Additionally, Danaos is selectively expanding into the dry bulk sector. The company has placed orders for two Newcastlemax bulk carriers, each around 211,000 dwt, expected in 2028, and anticipates receiving a secondhand Capesize bulker in early 2026.
Once fully delivered, Danaos' fleet will consist of 102 containerships totaling approximately 652,000 TEU and 13 dry bulk vessels with a combined capacity of about 2.37 million dwt.
The company continues to focus on long-term contracts, adding around $428 million to its revenue backlog through charter extensions and new agreements for 17 containerships.
The total contracted operating revenue now stands at $4.3 billion, including newbuildings, with an average remaining charter duration of 4.3 years across the containership fleet.
Charter coverage remains very high, with Danaos reporting 100% coverage for 2026, 87% for 2027, and 64% for 2028, based on scheduled deliveries.
“We have continued securing forward contracts even into late 2027,” Coustas said, emphasizing that this provides earnings stability against future market fluctuations.
A significant strategic move for Danaos came in January when the company announced a partnership with Glenfarne Group related to the Alaska LNG project.
This deal includes a $50 million investment in Glenfarne Alaska Partners and positions Danaos as the preferred provider for at least six LNG carriers tied to the project, which aims for an annual output of 20 million tonnes.
Management sees this investment as a careful step into the energy sector, rather than a complete shift from their core operations.
“Supported by a solid financial foundation, we are exploring targeted investments in the energy sector to diversify our revenue sources and expand in the LNG market,” Coustas explained.
During the quarter, Danaos strengthened its balance sheet further. In October, the company successfully completed a $500 million senior unsecured bond issue with a seven-year term and a 6.875% interest rate. The money raised is being used to pay off more expensive debt.
So far, the company has paid back $111.4 million of secured loans and plans to fully redeem its 8.5% senior notes due in 2028 by March 2026.
At the end of the year, 77 out of Danaos' 85 vessels were debt-free, with 61 unencumbered, and total liquidity reached $1.4 billion.
Danaos also focused on returning capital to shareholders, having bought back $235.1 million worth of stocks and declaring a $0.90 per share dividend for the fourth quarter.
Operationally, fleet utilization remained high in both segments. Containership utilization reached 99.3% for the quarter, while the dry bulk fleet reported 99.8% utilization, a notable increase from the previous year.
Fourth-quarter operating revenues rose by 3.1% year over year, totaling $266.3 million, with dry bulk revenues soaring nearly 24%, driven by higher utilization and better chartering conditions.
Daily operating costs averaged $6,377 per vessel, which the company states is among the most competitive in the industry.
“The Company is focused on positioning itself at the forefront of shipping and energy growth areas,” Coustas said, “while maintaining strong earnings visibility and financial discipline.”